Education Reporter at The Age

The Auditor-General is set to receive long-awaited ''follow the dollar'' powers this year to scrutinise a growing number of taxpayer-funded projects and services delivered by the private sector.

The Napthine government confirmed it would introduce legislation to let the Auditor-General access private sector financial records that are shielded from scrutiny by commercial-in-confidence rules.

Labor was poised to make an election promise to provide the very same power.

A spokesman for Finance Minister Robert Clark accused Labor of ''trying to jump on a bandwagon'' it had ignored in government.

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''The government has already begun the preparation of legislation to implement this reform and has met with the Auditor-General to discuss the details of the legislation,'' the spokesman said.

Shadow Attorney-General Martin Pakula said it was time for the financial watchdog to be given vital ''follow the dollar'' powers to protect taxpayer funds.

The Audit Office has been pushing for the powers for four years, arguing its ability to scrutinise taxpayer-funded projects has diminished rapidly as government increasingly uses the private sector to deliver services and build projects.

In October, Fairfax Media revealed the Audit Office was unable to visit two private jails to audit drugs in Victorian prisons because its mandate did not extend to private-sector providers.

Victorian Auditor-General John Doyle used his first annual report to call for an urgent overhaul of the Audit Act, saying significant spending, including through public-private partnerships were ''not subject to audit scrutiny''.